Capgemini to acquire iGate for $4bn

Capgemini is bolstering its US business and global delivery capabilities with the acquisition of iGate

Capgemini is bolstering both its US business and global delivery capabilities through the acquisition of iGate for $4bn.

The combined operations will create a €12.5bn company.

Capgemini’s North American business will receive a boost from the deal, as the region accounted for 79% of iGate’s sales in 2014 and about 50,000 employees will support customers there.

It will also help Capgemini reach its target of employing more than 70,000 staff in India by the end of 2016. 

At the end of 2014, the French IT services firm had about 55,000 employees in India – 15% more than at the end of 2013. Almost all (95%) of the company’s workforce growth was the result of recruitment in India.

Read more about Capgemini and iGate

iGate, which acquired Indian outsource company Patni for $1.22bn in 2011, brings more India-based staff.

The combined company will have 190,000 employees, with over 100,000 of those in global delivery centres, including a large proportion in India.

Peter Schumacher, CEO of management consultancy the Value Leadership Group, said: “Like its acquisition of Kanbay in 2006, iGate will strengthen Capgemini’s global delivery model and business in the US.

“Additionally, Capgemini will gain expertise around managed services models, an area where iGate has been on the leading edge. The success of this acquisition will be determined by the revenue synergies it creates. As always, this will be a tough challenge.”

Capgemini CEO Paul Hermelin said the deal would increase Capgemini’s status in the US. “This will also give to the group’s Indian operations a new scale, allowing us to compete on par with the best US and India-based companies,” he said.

Read more on IT outsourcing

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